Somerfield is spending£3.4 million on improving its logistics system for imported goods, but expects to make big savings within the first year.
Exel will provide logistics for all imported goods, and anticipates that the retailer will save about£1.5 million in the first year.
Goods will be handled through Exel's distribution centre at Banbury, Oxfordshire. Products involved include canned goods from Europe, non-food items from the Far East, and beers, wines and spirits from around the world.
Exel's tracking and tracing system, and use of one central distribution point, will mean more full loads and therefore lower costs.
Somerfield's distribution centres will be able to reduce stock holdings because they will be able to get orders from Banbury within 48 hours.
The contract with Exel is part of wider supply chain changes to streamline the movement of goods between manufacturers and the retailer's distribution centres.